Texas Values v. High-Speed Infrastructure

Despite persistent controversy, Texas Central Partners LLC (“Texas Central”) continues development of its high-speed railway between Dallas and Houston. Although construction has not formally begun, the administrative ramp up that precedes major infrastructure projects like this one has already ruffled some feathers. For those unfamiliar with the project, Texas Central plans to connect the two metropolitan areas with a 240-mile high-speed train route. Early estimates predict that the train ride will take only 90 minutes, a significant time saving when compared with the alternative four-hour journey via car. Project advocates claim that the rail system will boost economic growth in the two regions by cutting down on travel time, while opponents assert that the project will burden landowners with an improper use of eminent domain power.

The current construction plan is to build a substantial portion of the train parallel to an existing powerline right of way. Texas Central has been silent regarding how much of the necessary land they have already acquired, as well as amount of essential land that has still gone unpurchased. This continues a pattern of Texas Central being tight-lipped with respect to its progress with landowners, implying that many acquisitions still remain, and that efforts to acquire the necessary land have not proceeded smoothly. Progress has been further frustrated by a large number of landowners who are actively opposing the project. Indeed, many of these landowners have come together to form a grassroots opposition group called Texans Against High-Speed Rail. The organization is led by Kyle Workman, and seeks to stop the project dead in its tracks. So far, they have been unsuccessful.

The primary concern of project opponents is whether private companies, such as Texas Central, can use eminent domain. A face value examination of current Texas laws suggests that railroads can use eminent domain to take land for public projects.In 2012, Texas Central registered themselves as a foreign limited liability corporation (LLC), with plans to “own, develop, build and operate a railroad.” Despite the Texas Secretary of State’s approval of this business purpose, landowners have argued that Texas Central doesn’t qualify as a railroad since it’s not currently operating any trains. In response, Texas Central, claims that the $125 million dollars they have raised and spent on the design and development of a railroad qualifies them as a railroad operator. They further point out that they’ve received federal approval of their activities. In addition to the funds already spent, the company announced earlier this year that it had raised an additional $300 million in loans from Japanese lending entities.

Landowner grievances however, go far beyond the issue of whether a private company’s use of eminent domain is permissible. Many property owners have expressed concerns about the long-term effects that the project may have on their lands and livelihoods. For instance, most of the high-speed rails will be elevated on earthen berms to avoid stopping for intersecting roadways and other tracks. Many of the landowners potentially affected by this project are ranchers, passionate about their way of life, and determined to continue living it. Some have been on their land for generations; they were raised on it, and intend to raise their children on it. Their lives are rich with heritage and tradition, inextricably tied to the land they currently inhabit. These landowners worry about the berms in particular because they will form inaccessible barriers for livestock, tractors and other farm equipment. As a response, the company has promised to add pass-through culverts in portions that will be bermed. Another argument is that building a berm through the property will hurt its value by splitting it into two separate tracts. Others worry on how they will be able to pass down the land to their families.

Texas Central has begun to sue landowners who wouldn’t agree to let the company survey their properties. More than 20 of those cases have settled and over a dozen others have dropped. To date, no court has rule definitively on the issue of whether Texas Central actually has condemnation power. While both parties await a decision, Texas Central continues their plan for land acquisition.

Texas state officials side with Texas Central since the state’s transportation budget hasn’t kept pace with the developing areas. State leaders have thus welcomed private investment into mass transportation. Additionally, Texas Central’s promise that their project will provide jobs and spur economic development, has helped solidify support from government officials and business leaders.

The legislature may be the most visible battleground where the fight between the high-speed rail and private property values is taking place. On the one hand, the rail is a privately funded transportation infrastructure, the product of a robust and unrestrained free-market economy. On the other, it is an instance of free market activity which runs in direct opposition to another of Texas’ cornerstone values: private property rights, the ability of a landowner to enjoy the use of their land to the fullest and freest extent. What therefore, could be more contrary to private property rights than the forcible seizure of land? For two legislative sessions running, the free market has emerged the victor. Bills initiated by project opponents, designed to slow or eliminate the project, have suffered proverbial derailment, for now leaving the project clear to proceed, full steam ahead.

Whatever the fate of Texas Central’s HSR project, it has become clear by this point that the project, and with it, the specter of eminent domain, will not be going anywhere anytime soon. Affected landowners may wish to begin familiarizing themselves with their legal options. Short of legislative intervention or some other such response, a strategic assertion of their legal rights may be the landowners’ best chance of ensuring fair treatment in the face of this difficult process.

Written by Monica Kim and Christopher Chan

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Luke Ellis and Justin Hodge are partners with Marrs Ellis & Hodge LLP. Justin heads the firm's eminent domain practice in the Houston office. Luke heads the firm's eminent domain practice in the Austin office. Luke Ellis is widely recognized as one of Texas’s top young lawyers—and one of the top lawyers of any age practicing in the area of eminent domain. Mr. Ellis has broad experience and has enjoyed success in many types of civil litigation. Justin Hodge is a trial lawyer who represents Texas landowners in condemnation, eminent-domain, and real-estate lawsuits. He represents landowners in condemnation proceedings, not the governmental authorities or private companies taking property. Mr. Hodge has handled complex condemnation and eminent-domain cases throughout the State of Texas.
If you have questions about any of the issues raised in this blog, we invite you to discuss them with us at jhodge@mehlaw.com or lellis@mehlaw.com.